This week in “Last Week in BizBall“, paperless ticketing and the secondary market, plus tidbits.
PAPERLESS TICKETING & THE SECONDARY MARKET
Last month I blogged about the problems that secondary ticketing has created for many MLB franchises. Many clubs believe that the secondary market has diminished the value of their season tickets and hurt their walk up gate. Within that post I brought attention to reports that the Braves are offering some ticket inventory via Ticketmaster’s paperless option. There was speculation that the Braves motive behind this offering was to control this inventory if/when it is offered on the secondary market. Tickets purchased via Ticketmaster’s paperless offering can only be resold via Ticketmaster. In May, I blogged about the glut of cheap MLB tickets on the secondary market. At that time I wrote, “…across professional sports, clubs appear set to impose stricter controls over who they allow to resell “their” tickets. This initiative is made more feasible with the move to “paperless ticketing” which will allow ticketing vendors to impose restrictions on reselling. Ultimately, some speculate the future of ticketing will be decided in court over the question of who owns the ticket and what they are allowed to do with it.” LWIB, the New York Times published an Op-Ed piece from Albert A. Foer. Mr. Foer is president of the American Antitrust Institute and formerly a lawyer with the FTC. Mr. Foer’s piece is a direct attack against the practice of paperless ticketing and the restrictions it imposes on where and how a ticket can be resold.
But in reality, the restrictions represent an effort to control the secondary-ticketing market and stifle competition from independent resellers and resale marketplaces like StubHub, where tickets are often sold for less than face value. (The American Antitrust Institute, of which I am president, received a modest contribution, in the form of sponsorship of a conference last year, from an advocacy group financed in part by StubHub.) Paperless tickets bought through Ticketmaster may be resold, for example, only through its own resale Web site, which often prohibits sales below face value, sets maximum sale prices and charges a fee for transfers.
As Mr. Foer notes, the practice of paperless ticketing is today a very minor concern. He estimates that it represents about 1% of all live-event tickets sold. But, going forward, will an increasing number of MLB tickets be sold via the paperless option? After all, it isn’t the tickets being resold on StubHub at greater than face value that is the problem. The problem many clubs have is the cannibalizing of their primary sales due to large amounts of inventory for low-demand games dumped on the secondary market for well below face value by ticket brokers and season ticket holders. If clubs, via the paperless option, can control where and how “their” ticket is resold and, more importantly, set the secondary price….problem solved.
MLB’s formal secondary ticketing partnership with StubHub expires after this upcoming season. Commissioner Selig has already acknowledged that secondary ticketing is problematic for MLB as evidenced by his formation of a committee last year to study the situation. MLB’s unrivalled success in digital media and soaring value of local media rights rightfully garner much attention when the industry’s record $7 billion plus annual revenues is discussed. But, good ol butts in the seats remains the industry’s largest single source of revenue. More recently we are also beginning to understand that secondary ticketing is not only important to MLB but to fans of MLB also.
SELECT READ MORE TO SEE THIS WEEK'S TIDBITS
- A few weeks back it was anticipated that during the owners meetings the sale of the Padres from John Moores to Jeff Moorad would be officially concluded. You probably know that that didn’t happen due to MLB’s concerns over the financial worth of Moorad’s ownership group. LWIB, Tim Sullivan reported that Moorad’s former partner in Arizona, Ken Kendrick, is “obsessed” with blocking Moorad from becoming the Padres “control owner”. Tim adds that White Sox owner, and close ally of commissioner Selig, Jerry Reinsdorf, is also strongly opposed to Moorad assuming control of the Padres. Tim does predict that, eventually, Moorad’s group will gain control of the Padres. Mike Ozanian of Forbes wrote that Selig is concerned about Moorad’s groups ability to carry the $200 million of debt attached to the franchise, particularly in light of the messes that the Mets and Dodgers are in.
- You know that the gap between the haves and have nots in MLB is usually no longer an outcome of which clubs play in a retro chic mallpark and which clubs play in a big bowl multi-purpose stadium. You know that the gap today is often an outcome of which clubs have cashed in on the exploding value of local TV rights and which haven’t. LWIB, Adam Kilgore reported on the negotiations between the Nationals and MASN. Negotiation is somewhat a misnomer in this instance because the Nats can’t solicit competing offers. Nonetheless, according to Adam, the Nats “…could hope to double or triple the $29 million they received from MASN in 2011.” The club will argue that Washington is the country’s 8th largest media market while MASN will counter that the Nats TV ratings were lowest in MLB last season. Should the parties be unable to conclude negotiations, an arbitrator will decide the new rights fee. The club has hired sports media heavyweight Chris Bevilacqua to negotiate on their behalf. And, reminiscent of the Albert Pujols deal, might the Nats signing of Prince Fielder make their TV rights much more appealing to MASN?
- The newly concluded CBA moves MLB closer than ever to expanding the Rule 4 draft (aka amateur draft) beyond its current boundaries of the US, Canada and Puerto Rico. An “international draft” would obviously be most important in the Dominican Republic which produces an ever increasing number of players for MLB. Many, including me (here and here), have wondered if bringing the draft to the DR will result in that country producing far fewer players for MLB. Why do we wonder that? Because a lot of Puerto Ricans believe that the introduction of the draft in their country caused a dramatic decline in the popularity of baseball there. LWIB, the New York Times published Puerto Rico Traces Baseball’s Slide to the Draft.
- Cubs owner Tom Ricketts continued his efforts to increase revenues at Wrigley Field, complicated by the ballpark’s “landmark status” and the necessity of preserving the “purity” of some of baseball’s most hallowed ground. LWIB, the Cubs unveiled their plans for a big honkin “party patio” in the right field bleachers which include….wait for it Field of Dreams enthusiasts….LED SIGNAGE!!!! No doubt some will squawk about it but I bet it is a big, big hit. Ballpark Digest has a drawing and more.
- TicketNews.com reported that the Twins are expanding their use of dynamic pricing this upcoming season to include all single-game tickets. Standard pricing will be in effect when Twins single-game tix go on sale February 25. As of March 9, going forward, all Twins single-game tix will be dynamically priced. None of this is particularly notable because the use of dynamic pricing by MLB clubs has been spreading rapidly since the Giants were the first to implement it (on a limited basis) in 09. Of more interest is the discussion as to whether the Twins are expanding their use of dynamic pricing to combat ticket brokers. "Dynamic pricing, in many ways, begins to level the playing field," SeatGeek.com spokesman Will Flaherty told TicketNews. Of the increased competition with pricing, he added, "More widespread use of dynamic pricing across MLB will likely have a net negative impact on ticket brokers." The report goes on to describe how the Twins attempted to limit the number of season tickets brokers could purchase for last season, with the brokers accusing the club of scalping their own tickets.
- LWIB Rays owner Stuart Sternberg met with St. Petersburg mayor Bill Foster. After the meeting, little to nothing was said to the press by either man about possible new stadium initiatives or proposals to break the Rays lease at Tropicana Field. According to local press reports, the upshot of the meeting appears to be that the city council has decided they will help market the team with the goal of increasing attendance. The day of the meeting, Joe Henderson astutely pointed out that, subsequent to the “leaked financial docs” of 10 which showed a profitable Rays franchise in 07 & 08, and the SEC investigation into public funding of the Marlins new digs, the public will be cynical about helping the Rays build a new ballpark.
- Ballpark Digest reported that the 13 edition of the Triple A ASG will be played in Reno. This upcoming season’s Triple A ASG will be played in Buffalo.
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Pete Toms is senior writer for the Business of Sports Network, most notably, The Biz of Baseball. He looks forward to your comments and can be contacted through The Biz of Baseball.
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